Donegan v. Baker & Holmes Co.

• Decision Date: 02 February 1917
• Citation: 74 So. 202,73 Fla. 241
• Parties: DONEGAN v. BAKER & HOLMES CO.
• Court: Florida Supreme Court

74 So. 202

73 Fla. 241

DONEGAN v. BAKER & HOLMES CO.

Florida Supreme Court

February 2, 1917

Appeal from Circuit Court, Osceola County; Jas. W. Perkins, Judge.

Bill by the Baker & Holmes Company against Arthur E. Donegan. From an interlocutory decree overruling a demurrer to the bill of complaint, defendant appeals. Affirmed.

Syllabus by the Court

SYLLABUS

A corporation being heavily indebted, and whose debts exceeded its available assets, after consultation with some of its creditors, executed a deed to D., conveying certain real property for a stated consideration, and took from D., the creditors consenting, a paper writing in which D. agreed to hold the amount agreed upon as the purchase price for the real estate, for the following purposes: 'First, deduct the recorded mortgage indebtedness against the property and pay the same; second, take the remaining moneys and disburse to the best advantage for the creditors as shown by the list below, it being understood that this list shows the names and amounts due all the creditors to whom the Ludlam and MacDonough Company (the corporation) are indebted.' Held that the fund in the hands of D. constituted a trust fund for the benefit of certain creditors to be disbursed by D according to his directions 'to the best advantage of the creditors.'

The transaction recited in the above headnote was not a novation because the debts of the corporation were not extinguished by it, nor were the claims fo the named creditors canceled by the trustee's obligation.

In a suit by a cestui que trust for a distribution of a trust fund, the trustor or person creating the trust is not a necessary party.

Where a court of chancery assumes jurisdiction of a cause for one purpose, which is the principal object of the suit, it will proceed to the settlement of the entire case.

COUNSEL Johnston & Garrett, of Kissimmee, for appellant.

Stockton & Osborne, of Jacksonville, for appellee.

OPINION

ELLIS J.

This appeal was taken from an interlocutory decree overruling a demurrer to the bill of complaint

The bill seeks to subject a fund in the hands of appellant to the payment of complainant's claim which, according to the bill, was one of the objects for which the fund was created. Ludlam & MacDonough Company, a Florida corporation, was heavily indebted to many creditors, such indebtedness exceeding its available assets. The involved corporation owned certain lands which the corporation, after consulting with complainant and other creditors, agreed to convey to the defendant for the sum of $7,000, which was to constitute a fund in the hands of defendant to be used, first, to pay off two mortgages amounting to $4,099.83, afterwards other indebtedness of Ludlam & MacDonough Company, aggregating $6,394.16. The terms under which the defendant held the money as shown by the instrument containing the agreement, and attached to the bill as a part of it, are as follows:

'First, deduct the recorded mortgage indebtedness against the property and pay same.

'Second, take the remaining moneys and disburse to the best advantage for the creditors, as shown by the list below, it being understood that this list shows the names and amounts due all the creditors to whom the Ludlam & MacDonough Company are indebted.'

The bill alleges that the land was conveyed to the defendant pursuant to the agreement that the two mortgages were paid off and canceled, and that the sum of $2,900.17 still remained in the defendant's hands, to be applied according to the agreement to the claims of the remaining creditors consisting of 'bills payable,' 'accounts,' purchase price of a dredge, and wages and salaries; that the complainant was one of the creditors of Ludlam & MacDonough Company; that the debt of the latter company to complainant amounted to $955.02, and was included in the list aggregating the above sum of $6,394.16; that $1,000 of the above total indebtedness was due for a dredge purchased from Fairbanks, Morse & Co., who had reserved title and taken the dredge into their possession, thereby extinguishing its claim; that complainant had placed its claim in judgment several months after the defendant became the purchaser of said property under the agreement with Ludlam & MacDonough Company and its creditors, which judgment complainant offers to cancel upon the receipt by it of the sum due under the terms of the trust. The bill alleges that the complainant has never received any part of the trust fund; that the defendant refused to render an accounting of the money to be paid out under the aforesaid agreement, and prays that the defendant be declared a trustee for complainant and others similarly situated; that a master be appointed to state an account of the amount remaining...